Relationship between costs and the value of providing additional financial information
- Providing extra financial information increases value in
the short-run. However, in the long-run it actually has a
negative effect on value.
Why are there so many failures in business?
- Lack of clearly defined and/or achievable milestones
and objectives to measure progress
- Lack of commitment by senior management
- Poor communication
- Employee resistance
- Insufficient funding
Strategic drift
The challenge of organizational change
As the rate of change in the business environment continues to increase, the premium on organization’s being
able to change is growing every more significant.
Organizations are built to be stable…
As a result, most efforts at designing and managing organizational change are dismal failures
Formulaic approach to Strategic Change
Off-the-shelf solutions or change agents’ preferences Implementation strategy Change outcomes
Context-Sensitive approach to change
Change context Implementation strategy Change outcomes
Two basic types of change
Reactive change Proactive change
(1) Closing a performance gap (what is (1) Closing an opportunity gap (what is
and what should be) and what could be)
Four distinct Scenarios Types of change in specific contexts
, Chapter 3
3 distinct organization change phases (Lewin)
1. Mobilization phase
- Make the case for the change initiative
- Build the organizational capacity for change
2. Movement phase
- Build momentum for change initiative
- Preserve and continue to build organizational capacity for change
3. Sustain phase
- Institutionalize change initiative
Kotter’s 8 steps Mobilization phase = 1-3
1. Establishing a sense of urgency
Movement phase = 4-6
2. Forming a powerful guiding coalition
Sustain phase = 6-8
3. Creating a vision
4. Communicating a vision
5. Empowering others to act on the vision
6. Planning for and creating short-term wins
7. Consolidating improvements and producing still more change
8. Institutionalizing new approaches
Change formula
(D x M x P) > cost of change (if change is to occur)
D = Dissatisfaction
M = model; P = Process
Reasons for individual resistance to change
Direct costs Breaking routines
Saving face Incongruent systems
Fear of the unknown Incongruent team dynamics
Resistance to and Costs of change
Resistance to change Costs of change
Anger Change in reward structure
Active or passive aggression Power shifts
Withdrawal Requirement for new competencies
Fear of loss Need for new relationships
Challenge to identity
Require time and energy
Raising dissatisfaction
Dissatisfaction = Emotional energy about performance or opportunity gaps
Communicate NEED for change and COSTS of not changing
Performance/opportunity gap analysis (internal and external_
o Comparative data
o Contextual landscape analysis
o Benchmarking
o Employee attitudes
Sharpen awareness of gap analysis
Involve key people
, Chapter 3
M: Focusing Dissatisfaction
Clear and widely understood model for change (M), sometimes referred to as visions
What is being changed and why?
Where we want to go/ what do we want to become
Model/vision must be compelling and meaningful
Appeal to logic, emotion, and values
Characteristics of effective models/visions
Desirable
(1) Satisfies stakeholders
(2) Motivates employees
Feasible
(1) Opportunity for short term wins
(2) Realistic stretch
Relevant
(1) Contextually sensitive
P: Some key process choices
Build credibility
Communication plan
Build coalition
Pace and involvement
Training
Build organizational capability
Metrics and measurement
Pace of change
Directive Persuasion
Urgency or crises Not a crisis
High dissatisfaction High need for commitment to engage
Low resistance in change
High level of support Change is not clear
Change agent has relevant Change is not complex
information Change agent needs support of key
Changes are clear constraints
There are six types of change levers.
Enabling- These levers raise awareness for targets
Credibility (e.g., invite external consultant to extoll change)
Communication (e.g., initiate town hall meeting)
Training (e.g., provide external training experience)
Substantive – these levers facilitate adoption by targets
Technical (e.g., align the reward system to with change initiative)
Political (e.g., privately confront a resister)
Cultural (e.g., tell a success story)
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